CIT JALANDHAR vs. M/S SIRI KARNI NAMKIN BHANDAR MOGA

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ITR/186/1995HC Punjab & HaryanaPHHC01032247199529 November 2006Author: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE ADARSH KUMAR GOEL2 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the Income Tax Appellate Tribunal was right in law in upholding the deletion of the addition of Rs. 70,000/-. The Court referred to its recent decisions in I.T.A. No.370 of 2006 (Commissioner of Income-tax, Chandigarh-II v. M/s Metal & Metals of India, Mohali) and I.T.R. No.80 of 1998 (The Commissioner of Income-tax, Jalandhar v. M/s Bhagwati Rubber & Chemicals, Jalandhar). In these cases, it was held that unexplained investment of a partner in the accounts of the firm does not warrant an addition to the income of the firm. Such unexplained investment may only call for an addition to the income of the partner. Therefore, the question referred was answered against the revenue and in favour of the assessee. The reference was disposed of.

What were the facts?

The Income Tax Appellate Tribunal (ITAT), Amritsar Bench, passed an order on 12.04.1991 in I.T.A. No.1077(ASR)/1990 concerning the assessment year 1987-88. The Commissioner of Income Tax, Jalandhar (the revenue) filed a reference application to the High Court of Punjab and Haryana at Chandigarh. The dispute pertains to the deletion of an addition of Rs. 70,000 made by the revenue on account of unexplained cash credits found in the capital accounts of the parties appearing in the books of M/s Siri Karni Namkin Bhandar, Moga (the assessee). The Deputy Commissioner of Income-tax (Appeals) had deleted this addition, a decision upheld by the ITAT. The revenue challenged the ITAT's order.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in upholding the order of the Deputy Commissioner of Income-tax (Appeals) who deleted the addition of Rs. 70,000/- in the firm on account of unexplained cash credits found in the capital accounts of the parties appearing in the books of accounts maintained by the firm? (Question of law) Assessee's contentions: Not recorded in the judgment. Revenue's contentions: The revenue argued that the addition of Rs. 70,000/- on account of unexplained cash credits in the firm's books should be sustained. The revenue likely contended that these credits represented undisclosed income of the firm. The revenue relied on the fact that the addition was made to the firm's income.

Which sections of the Income-tax Act were involved?

Not explicitly mentioned in the provided text, but the context implies discussions related to additions to income and unexplained credits, likely under sections concerning income from business and professions, and potentially sections dealing with undisclosed income or credits.

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COU RT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.R. No.186 of 1995 Date of decision: 29.11.2006 The Commissioner of Income Tax, Jalandhar. ---Applicant Vs. M/s Siri Karni Namkin Bhandar, Moga. -----Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOEL HON'BLE MR JUSTICE RAJESH BINDAL Present: Dr. N.L. Sharda, Advocate for the revenue. Mr. Pankaj Jain, Advocate for the assessee. -----

ORDER: Following question of law has been referred for opinion of this Court by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar, arising out of its order dated 12.04.1991 in I.T.A. No.1077(ASR)/1990 in respect of assessment year 1987-88:- “Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in upholding the order of Deputy Commissioner of Income-tax (Appeals) who deleted the addition of Rs.70000/- in the firm on account of unexplained cash credits found in the capital accounts of the parties appearing in the books of accounts maintained by the firm?” Learned counsel for the revenue does not dispute that the issue involved in the question referred, has been gone into by this Court, recently, in order dated 06.11.2006 in I.T.A. No.370 of 2006 Commissioner of Income-tax, Chandigarh-II v. M/s Metal & Metals of India, Mohali and order dated 07.11.2006 in I.T.R. No.80 of 1998 The Commissioner of Income-tax, Jalandhar

I.T.R. No.186 of 1995 v. M/s Bhagwati Rubber & Chemicals, Jalandhar, wherein, the question has been answered against the revenue and it has been held that un-explained investment of a partner in the accounts of the firm does not call for addition to the income of the firm and only addition to the income of the partner may be called for.

In view of above, the question referred is answered against the revenue and in favour of the assessee.

The reference is disposed of. ( ADARSH KUMAR GOEL ) JUDGE November 29, 2006 ( RAJESH BINDAL ) ashwani JUDGE Pag e

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